Appearance

In Tolkien's writing, Orcs are described as humanoid, roughly human-sized, ugly and filthy. Although not dim-witted, they are portrayed as dull and miserable beings, who corrupt words (an insult to a philologist like Tolkien) and are only able to destroy, not to create. They have sour black blood.
Orcs are used as soldiers by both the greater and lesser villains of The Lord of the Rings — Sauron and Saruman.
In Tolkien's Sindarin language, "Orc" is orch, plural yrch. In his late, post-Lord of the Rings writings (published in The Peoples of Middle-earth), he preferred the spelling "Ork", evidently mainly to avoid the form Orcish, which would be naturally pronounced with the c as /s/ instead of /k/. (In Tolkien's languages the letter c was always pronounced /k/.) It is also possible that the word is a Common Tongue Version of 'orch', the Sindarin word for Orc. The original sense of the word seems to be "bogey", "bogeyman", that is, something that provokes fear, as seen in the Quenya cognate urko, pl. urqui.

History

Orgin

The origin of Orcs is an open question. In Tolkien's writings, evil is not capable of independent creation, making it unlikely that the ValaMelkor, who was obviously the first to produce them, could do that ex nihilo.
In the The Silmarillion is mentioned that the Orcs were transformed from Elves — the purest form of life on Arda (the Earth) — by means of torture and mutilation; and this "theory" would then become the most popular. Moreover, if Orcs were in fact Elves at their core, this could perhaps mean that they were also immortal — a fact which, if true, would seem inconsistent with Tolkien's treatment of Orcs, though the books do not openly confirm or deny it. If Orcs indeed were immortal, it holds no doubt that their fëar would not be allowed reincarnation by Mandos, if they even answered the calling. Most Orcs would probably fear the calling of Mandos, and therefore would see their fëar diminished to evil spirits. These may have been some of the evil spirits occasionally described in the books, such as the spirit which tempted Gorlim of Barahir's company, or the Barrow-wights. There is some evidence for the immortality, or otherwise long life of Orcs in The Two Towers: Gorbag and Shagrat, during the conversation which Sam overheard, mention the "Great Siege" of the Last Alliance. It is possible to interpret from the sentence that they were actually there and remembered it themselves: an event which lay millennia in the past. Another interpretation of this conversation is that this "Great Siege" could have instead been merely the current siege ongoing at Minas Tirith or that they were refereing to the seige out of a knowlege of history. This is consistent with a statement made in the "Myths Transformed" essay of Morgoth's Ring that the orcs had short lifespans in relation to the Numenoreans.

Some of these things may have been delusions and phantoms but some were no doubt shapes taken by the servants of Melkor, mocking and degrading the very forms of the children. For Melkor had in his service great numbers of Maiar, who had the power, as their Master, of taking visible and tangible shape in Arda. (Morgoth's Ring, "Myths transformed", text X')

Boldog (…) is a name that occurs many times in the tales of the War. But it is possible that Boldog was not a personal name, and either a title, or else the name of a kind of creature: the Orc-formed Maiar, only less formidable than the Balrogs (Author's footnote to the text X)

Melkor had corrupted many spirits - some great as Sauron, or less as Balrogs. The least could have been primitive Orcs. (Author's note to text)

Later under Morgoth's lieutenant, the necromancer Sauron, it has been suggested that Men were cross-bred with the Orcs. This process was later repeated during the War of the Ring, creating the fierce Orcs known as Uruk-hai.

Yet other Orcs may have begun as animals of vaguely humanoid shapes, empowered by the will of the Dark Lord (first Morgoth, later Sauron): this may explain the references to their "beaks and feathers" in Tolkien's writings.

It is certain all Orcs were dependent on the Dark Lord in various ways: after their leader was defeated, the Orcs were confused and dismayed, and easily scattered by their enemies. In the millennia after Morgoth's defeat and banishment from Arda, they were without a leader they degenerated to small, quarrelsome tribes hiding in the Misty Mountains. Only when Sauron returned to power did they begin to reclaim some of their old power. The same happened after Sauron's defeat by the Last Alliance of Elves and Men: only when Sauron returned as the Necromancer of Mirkwood did the Orcs become a real danger for Middle-earth again.

It is interesting to note that to an extent, Tolkien did not regard Orcs as evil in their own right, but only as tools of Melkor and Sauron.
He wrote once that "we were all orcs in the Great War", indicating perhaps that an orc for him was not an inherent build-up of personality, but rather a state of mind bound upon destruction.

Orcs and goblins

In The Hobbit, Tolkien used the word "goblin" for Orcs, because he had not yet identified the world of The Hobbit with Middle-earth (which predated The Hobbit by several decades, in early writings which would later become The Silmarillion). Fortunately Tolkien did include some references to his mythology in the Hobbit, which later allowed him to identify the lands of the Hobbit with his Middle-earth.
In The Lord of the Rings, "Orc" is used predominantly, and "goblin" mostly in the Hobbits' speech.
This change can be seen either as a part of the shift towards the use of Elvish words that occurred during the period between the writing of The Hobbit and the writing of The Lord of the Rings, or a translation of the Hobbits' more colloquial manner (if we "accept" the books' authenticity and regard Tolkien merely as a translator). So essentially the race is correctly named "Orc", and "Goblin" is a colloquial "slang term" for Orcs used by Hobbits and sometimes picked up by Men and Elves. It is possible that "goblin" refers to the those of the orcish race who are not under the control of Sauron (or Morgoth), whereas using "orc" directly would refer to servants of (whichever) Dark Lord. Tolkien did mention several times that orcs were not inherently evil, something this theory would partly emphasize.

The original edition of the Hobbit and early drafts of The Lord of the Rings first used 'goblin' everywhere and used 'hobgoblin' for larger, more evil goblins: when goblins were replaced with Orcs Tolkien invented the term Uruk-hai for his more evil Orcs.

Kinds of Orcs

(Tolkien loosely implies that there are actually several different breeds of Orcs, not simply in the wide variety in clans, but strains of Orc that were specifically bred for certain tasks. The Fellowship usually encounters the large soldier-Orcs bred for war, and sometimes the "snaga" variety which were more geared towards being laborers. However, a strong hint at the variety of Orc breeds is when Frodo and Sam are in Mordor, and realize that they are being followed by two Orcs, then hide to observe them. One of the Orcs is a normal soldier-Orc, but the other is described as a "Snuffler", a breed specifically geared towards being a tracker. This tracker-Orc was, compared to the soldier-Orc, physically unimposing, but had vastly overdeveloped sensory organs, particularly a single giant nostril. While physically weak compared to the soldier-Orc, the "snuffler" was able to skillfully kill the soldier-orc when they got into a disagreement.)<---Move it to another article?

Controversery

Tolkien's Orcs have been a subject of criticism of racismas they are described as less-handsome Mongolians..., black-skinned and monkey-resembling. Another possible offensive theme present in orcs (though not necessarily racist), is the fact that when the orcs talk, they often use the same phrases and accents that the English working-class is known to use.

Other Versions

According to the oldest "theory" proposed by Tolkien, Orcs were made of stone and slime through the sorcery of Morgoth. But, Tolkien later changed the legendarium so that Morgoth could no longer produce life on his own